A blog devoted to Reno's economic recovery

Startups and the city: Reno aims to spur jobs

Lola Wei, owner of The Empress Secret, a Vitality drink company, stands next to her display holding a bottle of her product Glow at the Aroma Club coffee shop. / Andy Barron/RGJ

Reno is getting a reputation.

In this case, it’s as a community where new companies get their start — and the city is making sure that reputation sticks.

“We became aware of the startup community and this wellspring of activity that we wanted to support,” said Maureen McKissick, the city’s strategic development administrator.

Government help for businesses has come under scrutiny recently after a “free market” Nevada think tank sued the state for using funds to help companies relocate or expand here.

Assistant City Manager Bill Thomas not only doesn’t see Reno’s support for new or expanding businesses as a problem, he said the City Council sees it as a responsibility for local government.

He said this new emphasis on startups is a response to “what’s going on organically in our community with The (Reno) Collective and small-scale tech companies. The city has a choice of whether to support that, and the council, I believe, widely said, ‘Yes, we do.’

“We don’t direct any general fund money or spend any local taxpayer money for startup businesses. We connect people, we are responsive to requests for permitting. The only money we use comes from the federal government for economic development.”

Within those confines, the city of Reno is able to do quite a bit, from small things (help getting flags up downtown that proclaim “Startup Row”) to big things ($20,000 in early-stage funding for new companies).

Invitation only

The city’s startup efforts really got rolling after a report called Reno-Sparks a standout among all metro areas for entrepreneurial growth.

It was released in November at a mayors conference in Kansas City put on by the nonprofit Kauffman Foundation, which uses its $2 billion in assets to promote education and entrepreneurship. It’s an invitation-only event, and Reno’s growing reputation got it an invite.

“Now we’re being included in (a) higher level of discussions of what states and cities can do to support startups,” McKissick said.

The November conference talked about the nuts and bolts of startups and their effect on cities.

“It deepened our understanding of startups and their role in Reno,” McKissick said. “Staff now attend entrepreneurial meetings on a regular basis, so entrepreneurs know they have our ear and know that we will do what it takes to help them survive and prosper.”

Out of the conference, the city developed two monetary products to help businesses: the Reno Accelerator Fund and something that goes by the acronym VEDC.

Ancient secret

The accelerator fund might be the sexiest thing the city is doing to boost startups.

“When we began to work with the startup community, this is one of the needs they said they had: early stage financing,” McKissick said. “So, we saw opportunity to take a loan program we always had and use it in this way, in this one area where we could really make a difference.”

Eight local startups will each get $20,000. Lola Wei is one of those competing for a spot.

“The accelerator fund is perfect for business because it will help tremendously and get the economy going like a nonstop train,” she said.

A requirement to apply is that you’ve been involved in the past year with one of three Reno business accelerators: Girlmade, C4Cube or the Reno Collective. (An accelerator is a program to help businesses in the early stages with connections, mentorship, and generally a quick and concise evaluation of what it will take to make the company successful.)

Wei went through the Girlmade program last fall with her company, the Empress’ Secret. The company came about after she was diagnosed with an autoimmune disease that she was able to put into remission by tapping into her family’s history using traditional Chinese herbal medicine, she said.

“I’ve personally benefited from my drink, so I thought why not share this beautiful gift with the people here who are health-conscious and want to live a higher quality of life and age gracefully,” she said.

The result is a health and energy drink called Glow, made with such ingredients as goji berries, ginseng and dragon-eye fruit. After a year in production, the drink is in seven area stores.

If she gets selected for the Reno Accelerator Fund, Wei will use the money for marketing.

“It will build brand awareness,” she said, adding that this will accelerate the company’s growth, putting her a year or two ahead of where she would be without the money.

“If the Reno Accelerator Fund money comes into play, this year, for sure, we will hit the million-dollar sales mark,” she said.

The accelerator money will be put back into the community.

“I’m in Reno,” Wei said. “If I’m going to do more marketing, I’m going to work with local marketing firms and local radio stations. Then if I get my product into more local stores, they’re going to sell more and they’re going to benefit, too. The Reno Accelerator Fund really helps local businesses to accelerate, and that in turn will accelerate other businesses and then the goal of the accelerator fund will really be achieved.”

How fund works

The Reno Accelerator Fund is basically a partnership between the city and the Economic Development Authority of Western Nevada.

The city gets funds to help with economic development from the federal Housing and Urban Development agency — in the case of the accelerator, $200,000. Because the city can’t invest in companies, that money is given to EDAWN.

And EDAWN needed someone who could create a program from scratch, jumping through all the legal and regulatory hoops, making a website (www.acceleratereno.com), creating the application process, etc.

That someone was Nicola Kerslake and her enterprise Newbean Capital.

“This first one is a pilot program,” she said. “Applications will be open till midnight March 23. If there are more than 15 applications, then we will do a first run to pick out 15 finalists. The investment committee will make the final (eight) selections.”

That committee consists of representatives from EDAWN, the city and the Nevada Small Business Development Center at the University of Nevada, Reno.

She said the requirement that startups have worked with a local accelerator program is crucial.

“The success rate for companies working with accelerator programs is much higher,” Kerslake said.

More exposure

Ky Good of C4Cube thinks the fund is “hugely important.”

“It’s not only important for accelerators like us,” he said. “It’s important for new startup companies in the Reno area because the resources they need are capital — and human capital, mentors and advisors. This gives them more exposure and will allow them to get more of those needed resources.”

At least six companies that have been helped by C4Cube are going to apply for the fund, he said. The accelerators will get $2,000 from the fund for each company they worked with that makes the final cut.

C4Cube wants to help whoever is ultimately selected with the next step in their growth by connecting them with its network of mentors.

“There are a lot of companies starting in Northern Nevada that people don’t know,” Good said. “Getting exposure will help them and help the community. And this (accelerator fund) is a good impetus for the whole process.”

Loan void

Another money-backed program to help spur business in Reno involves VEDC, which stands for Valley Economic Development Center.

It’s a nonprofit lender based in Southern California for the past 35 years; last year, it expanded into Nevada. VEDC’s Reno business development officer is Chris Fream.

“We fill a void for small businesses who are startups or in business less than two years and who need funding to get started or to grow and expand but they can’t get financing through traditional means, through a bank,” he said.

Reno is providing VEDC with $275,000 for loan loss reserves and to pay for Fream to administer the loan program.

Loan loss reserves are money set aside to cover bad loans. Banks are leery of lending to companies at such an early stage because new ones have such a low success rate. The city’s money is a backstop to help secure loans.

And it’s Fream’s job to screen applicants to make sure, as much as can be done, that they are likely to succeed. He recommends that before coming to him, would-be loan applicants meet with people at UNR’s Small Business Development Center or the local SCORE mentorship office.

“Then they would call me, and we would have a face-to-face to go over their needs and come up with a dollar figure,” Fream said.

Through Reno’s program, people can apply for a loan in the $50,000 to $200,000 range. Fream said that VEDC itself can help with smaller loans if needed or ones up to $250,000.

The city’s loan loss reserve can be leveraged into giving loans totaling $2 million to $3 million.

“When the money goes out to these business, it creates jobs and it’s good for the economy,” Fream said.

Innovation

Another startup effort is the Innovation and Technology Council.

Councilwoman Hillary Schieve created it last year. The goal is to make the city more accessible through monthly meetings that bring together city representatives, entrepreneurs and startups, as well as other players in the community.

“Connectivity is essential,” she said.

As an example, she mentioned how the council meeting had put together real estate developer Ken Krater with Erik Hatch, who has an idea to create a digital trailhead in downtown Reno that displays pedestrian traffic flows by tapping into smartphones’ GPS data.

“Ken saw it and said, ‘I love this and want to help you get this done,’ ” Schieve said. “Those are the kinds of things that the Technology and Innovation Council can bring to the table.

“Sometimes, money isn’t what’s needed. Sometimes they need accessibility to the business department or office space. We’ve been able to offer that. We’ve been in touch with Google Fiber (for much greater Internet speeds). We’re at a tipping point, and Reno’s ready.”

Tedx, more

EDAWN’s Doug Erwin said the city is also doing a lot of little stuff that demonstrates a culture of support for startups.

“It’s making public buildings available for things like Startup Weekends,” he said. “It’s helping with events by getting better rates. The city leased the 16th floor of City Hall to Advanced Refining Concepts (which makes cleaner diesel fuel) — they see the broader picture of the benefits of having a tech company in the heart of it.

“The city has been instrumental in helping make Tedx Reno and Maker Faire a reality. They have helped us at every stage of the process … to allow us to hold the event at the Lear Theater.

“Tedx Reno is about ideas that inspire, which are critical in the earliest stages of the entrepreneurial journey. And Maker Faire is a showcase of the artists, makers and doers in the community — sharing ideas and helping showcase role models for others to learn from. Without the city understanding the importance of these in revitalizing downtown, I am not sure we would have been able to pull them off.”

Erwin thinks the city participating in the national dialogue about entrepreneurship is important, too.

“It may seem like a small thing, but I can’t tell you how helpful it was for the city to go to the Kauffman Foundation conference for mayors,” he said.

“It opened doors for us.”

He also liked the city’s support for the Biggest Little City pride campaign.

“What’s amazing,” Erwin said, “is all of these different efforts are headed in the same general direction — telling the world this is a great place to live and we have great things.”

• Tedx Reno: The 2014 Tedx Reno will be June 6 at the Lear Theater in downtown Reno. Tickets, which will sell out fast, go on sale May 1. Details: tedxreno.com. • Mini Maker Faire: People will show off their creations and inventions at an outdoor Mini Maker Faire from 10 a.m. to 6 p.m. June 7 at the Lear Theater in downtown Reno. For details, email ashley@girlma.de.